Norwegian Town Feels Housing Pinch
The foreclosure crisis rocking the United States may not seem like an international problem. But for Narvik, Norway, a town 120 miles north of the Arctic Circle, the housing slump is causing serious problems.
According to reports from the New York Times, the town of 18,000 earns most of its revenue from the energy generated by a nearby hydroelectric plant and a flourishing tourist industry. Using future income as collateral, the town invested heavily in the Florida real estate market during the housing boom.
The town's mayor believes she was duped into investing the town's money by Terra Securities, a Norwegian brokerage firm. Terra's license has since been revoked by the Norwegian government, which agreed that the company's disclosures were less than transparent.
But the town, with nearly a quarter of its annual income lost to the housing market, must now face the question of how to move forward. Reports indicate that Narvik will have to operate on a severely reduced budget next year, which could mean public services like kindergarten classes, museum displays, and hospital care could be sacrificed.
It seems the global financial ramifications of the collapsed subprime housing market are only beginning to show themselves.